Investors are also watching to see whether these companies can help keep the U.S. stock market up. Last week, the S&P 500 index rose 23% since the beginning of the year to a new high, and the Dow Jones closed above $43,000 for the first time, showing continued optimism about market growth.
As earnings season begins, the 30 companies in the S&P 500 beat earnings estimates by an average of 5%, up from 3% at the beginning of last quarter, according to Bank of America. An additional 41 S&P 500 companies announced earnings last week. However, the S&P 500’s forward P/E ratio is currently about 21.8 times, well above the long-term average of 15.7 times, and some analysts are warning that the stock’s valuation could be expensive. If these reports are disappointing, a market correction could occur as investors reassess valuations.
Here’s what to look out for as you look to upcoming releases from big tech companies.
1# Will Microsoft’s Azure division disappoint again?
Microsoft delivered better-than-expected revenue and revenue in its fiscal fourth quarter, with total revenue up 15% year-over-year. Net income increased to $22.04 billion from $20.08 billion in the year-ago period, or $2.69 per share.
While these results were solid, investors’ attention focused on Azure’s performance, which fell short of expectations for the first time since 2022. Azure and other cloud services posted 29% revenue growth, which was below consensus expectations and raised concerns about the health of Microsoft’s cloud division. It is losing momentum in an increasingly competitive market.
Despite Azure’s failure, Microsoft’s management remains optimistic about future growth, suggesting it could accelerate in the coming quarters. But investors remain cautious, especially as cloud computing continues to grow in importance across the industry, with Azure performance becoming a key driver of Microsoft’s overall growth.
